Interglobe Aviation, which runs IndiGo, on Friday said that co-founder Rakesh Gangwal, the Non-Executive, Non-Independent Director had tendered his resignation from the company board. In his resignation letter, he also mentioned that he will “slowly” reduce his stake in the company for the next five years.
Rahul Bhatia and Rakesh Gangwal were the two co-founders of the airline, where Rahul Bhatia roped in Gangwal for his knowledge of the aviation business. They have been friends before, and between them, they hold about 75% of IndiGo, with the split being largely equal amongst the both of them. There has been an ongoing dispute amongst both of them on the Right to First Refusal clause and other issues, and there was some resolution arrived at in the Emergency General Meeting held in December 2021.
Subsequently, while Rahul Bhatia stepped up to become Managing Director of IndiGo, Rakesh Gangwal has decided to step down from the Board of Directors of IndiGo. In his resignation letter from the board, he wrote,
I have been a long term shareholder in the company for more than 15 years and it’s only natural to someday think about diversifying one’s holdings. Accordingly, my current intention is to slowly reduce my equity stake in the company over the next 5 plus years.
While new investors should benefit from the potential future growth in the company’s share price, a gradual reduction of my stake should also allow me to benefit from some of the upside. Like any plan, future events may impact my current thinking.
Gangwal said since he will be offloading his stake, it is better to resign from the company and not be privy to unpublished price sensitive information (UPSI). He wrote,
However, I am concerned about the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information (UPSI). As you are aware, on an ongoing basis, the Company provides us information and some of this is UPSI. Being a co-founder, co-promoter and director, this issue takes on great significance.
Here is the complete letter he wrote to the board.
Qatar Airways has been interested, for a very long time to invest in IndiGo, and only time will tell if Mr. Gangwal will sell his stake in the open market or to Qatar Airways. Ideally, though, any move with respect to Qatar Airways would have to be ideally in one go, and not on a five-year basis, although if his first slice is going to be 10%, they might be interested. Additionally, IndiGo is one of Airbus’ prized customers, and Airbus and Qatar Airways are currently in a big legal feud about issues with Qatar Airways A350 aircraft.
IndiGo co-founder Rakesh Gangwal has stepped down from the Board of the airline he co-founded, and he intends to sell a part of his holding in the airline over the next 5 years. This might be an opportunity for Qatar Airways to get a foot in the door.
What do you think of the move from Rakesh Gangwal?
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